The Working World: How Estonia’s digital society is creating a haven for startups and entrepreneurs

In the US, the last place you expect to encounter high-tech efficiency is at the DMV, post office, IRS or any government agency. But in Estonia, it’s a different story.

Since gaining independence from the Soviet Union in 1991, the country has radically transformed itself. Through a project known as e-Estonia, this small Baltic state has been bulldozing bureaucracy and building a digital society.

In 2000, Estonia became one of the first countries in the world to declare internet access a basic human right, and the first to give its citizens blockchain-backed mobile IDs.

As a result, all those time-consuming tasks many people dread can be done online. Voting, filing taxes, accessing medical records, applying for loans, even registering a new business can be checked off your list in minutes.

As the President of Estonia, Kersti Kaljulaid, declared in her article for Quartz, “Governments must learn to provide public services as efficiently as Amazon sells books.”

And as Estonia is proving, they actually can. By creating a new social contract between the government and its citizens, Estonia is winning praise as the poster nation for digital democracy. The push from the public sector is propelling the private sector as well, with surging investment in startups, a new visa for borderless workers, and e-Residency for people who want to start and manage an EU-based company online.

So how is this movement inspiring entrepreneurs and liberating knowledge workers? Does this signal potential for digital societies in other countries as well?

A borderless haven for digital nomads

Karoli Hindriks is the Founder and CEO of Jobbatical, an immigration/relocation platform that connects companies with knowledge workers from around the world. For 20 years, she’s participated in the evolution of Estonian startup culture. At the age of 16, she invented her first product—a soft reflector that can be worn as clothing—while working on a school project.

“We started to brainstorm and I had an idea which turned out to be very unique,” says Karoli. “So I became the youngest inventor in my country. From there, I had the realization that at the age of 16 you can actually change things even if you’re from a small town in Eastern Europe. In a way, I got addicted to making a difference. So I’ve been an entrepreneur ever since.”

When she was 16, Karoli recalls being inspired by Estonia’s Prime Minister after the country gained their independence. “When he started, it was a very poor country. One of the things I saw from him was that we have to build the country with minimal bureaucracy. Everything should be simple, so people can focus on what they want to do.”

20 years later, Karoli says she thinks Estonia is the country with the best user experience for starting a company. “I started Jobbatical from a cafe, online while eating an omelette and drinking a cappuccino,” she says. “It literally took me 10 minutes. I can do my taxes sitting in South Korea in an airport lounge and it takes me two minutes. It’s such a seamless experience to be a citizen here.”

“Things are so easy that if anything takes more than 10 minutes, people get frustrated here,” she says. “You expect things to work. We should expect every country and every state and every immigration process to work just like we expect Amazon or Dropbox to work, right?

The inspiration for Jobbatical came when Karoli was in a time of transition after leading the launch of the National Geographic Channel and Fox Entertainment channels. “I was in Silicon Valley at Singularity University. While I was there, I started to think, ‘Why are so many amazing companies being built here? What is different? Are people smarter here?’ I started to realize, it’s not about people who are there, it’s about people who go there.”

Karoli started to wonder how she could help knowledgeable people discover places like Estonia and inspire them to go to Tallinn instead of Silicon Valley.

“My thesis was that to do that, we have to gather highly skilled, borderless people, then match them to the companies in the far-flung cities of the world,” she explains. “While we were doing that, we also had to take care of the relocation and immigration of those people. Like a true startup story, what started as our side service turned out to be our product-market fit. So now we are an immigration/relocation platform. We’re making immigration easy.”

Skype and the rise of the remote workforce

Sten Tamkivi is the Chief Product Officer at Topia, a global mobility management platform that helps employees work from anywhere. He’s also witnessed the evolution of the tech industry as the founder of Teleport and former General Manager of Skype Estonia. He says what gives Estonia an edge over other countries is their ability to affect change at a faster pace.

“I’ve lived in Estonia, Singapore, London, and Silicon Valley,” he says. “While I was living in Palo Alto and doing everything regarding my life in Estonia—paying taxes, operating with banks, signing contracts—all of these things are usually way easier than doing anything locally in the US where you have to show up or you have to fax some signatures.”

Sten says having a technical infrastructure that separates what you do from where you are “creates a fertile ground for operating a team in a mobile and location-independent way. When you’re building a global company from a country which has 1.2 million people, you know from the start you will not have the luxury of having everybody in the same room.”

Sten says building a tool like Skype that enabled free calls and video chats definitely encouraged a culture of remote teamwork, “But also there was this deeply embedded mindset for collaboration among the founding team of Skype: It really doesn’t matter where other people are.”

In Estonia, remote work isn’t a just a perk for employees. It’s essential for employers.

“In such a small country, the companies are international from day one, otherwise they won’t survive,” says Karoli. “If you start a startup in Germany, you have a big market from day one. Estonia is such a small market that, from day one, you need outside knowledge. Estonia is not generally the number one place for people to relocate, which forces companies to be flexible. To be competitive, companies here have to adjust very fast to new ways of working.”

Lower friction, higher expectations

Because Estonia has had digital signature laws since 2001, an entire generation has grown up with a higher expectation of efficiency and mobility than their peers in other parts of the world. “We’re used to the low friction that you need to do anything from anywhere,” says Sten.

“When I travel the world, there are people who are very sceptical about the government,” he says. “I think Americans are more free and open to trust their data with private companies than the government. Whereas in Europe, in general, I think you almost trust the government more.”

In Estonia, Sten says that mindset might be rooted in the principle that, as a private citizen, you own your data and the government and companies are just occasional keepers of it. “Part of that might come naturally and culturally,” says Sten, “But part of it needs nudging.”

In the mid-90s, Estonia introduced the Tiger Leap Program which focused on giving kids access to technology and giving every school broadband connectivity. “In the early 2000s, the private sector realized, ‘Everybody young is online. We have a few hundred thousand people at risk of being left behind.’” Sten explains. “Then there was this massive effort of training the elderly, giving them access to computers and some basic training.”

Can other countries follow Estonia’s example?

According to the President of Estonia, Kersti Kaljulaid, the decision to invest in infrastructure and provide free internet access points in schools and public libraries “shifted the fundamentals of our society.” It established new priorities that had a positive ripple effect in both the public and private sector.

But the changes came at a crucial watershed moment in Estonia’s history when they were reinventing their country in the wake of newly gained independence from the Soviet Union. Without a similar cultural reset, will it be possible for other countries to enact the fundamental changes needed to become fully digital societies?

“One thing that I’ve seen, taking a more global perspective, is that smaller societies have an edge,” says Sten. “You see a lot of cool stuff happening in Estonia because it’s 1.2 million people. Iceland has 300,000 people. There is Singapore, Netherlands, Finland, Sweden. There’s something about those societies and countries having similarities to startups in tech. That is: when you are smaller, you can move faster. A smaller group of people having a vision can impact real change.”

“There’s a William Gibson quote, ‘The future is already here, it’s just unevenly distributed.’ I think there are some things you just happen to see in Estonia first,” says Sten. “I don’t think those trends are unique to Estonia or Northern Europe. You see them popping up around the world at a different pace and probably in smaller states next.”

“Estonia is still acting like a startup,” adds Karoli. “There’s this fail-fast mentality… ‘Let’s measure and then if it doesn’t work, let’s drop it.’ In a way, it’s like comparing IBM to a startup. I think a lot of countries have so much legacy that making the change is extremely difficult. I also think there will be a redefining of what a country is. I hope countries will be able to adapt, but that would mean that a lot of the legacy has to be put aside.”

“Even with e-Estonia, we have seen the backlash,” she says. “I’m an optimist. What I like to think is, there’s a change happening and change causes reactions. We have a reaction because something is changing fast. The question is, how will we adapt to the change?”

The smart workspace and the future of remote collaboration

Dropbox recently introduced Dropbox Spaces as the first step in building the smart workspace of the future. So we were curious what a smart workspace for remote collaborators might look like.

“I’m super passionate about that,” says Sten. “Because at Topia, we have about 170 people in the company. A majority of my teams are between Tallinn, Estonia and Bellevue, Washington. Most of my executive peers are in San Francisco. Then, we have offices in London and Dublin and New York, plus remote employees.”

To succeed in that organizational layout, Sten has adopted some principles rooted in the open-source movement: “You have to write liberally, meet frequently, and congregate occasionally.”

Sten says meeting frequently is all about video calls, one-on-ones and team group meetings. Congregating occasionally is all about gatherings such as quarterly off-sites.

“Then there’s writing liberally. So much of your work actually depends on writing,” says Sten. “People write all day long in Slack channels, in Google Docs, in JIRA tickets, in Confluence, and all the spaces where you have to be. This space is super fragmented. I think the future workspace is something that allows you to quite swiftly move between the synchronous and asynchronous modalities.”